CANNES, France (Reuters) - As the Cannes film festival entered its second half on Tuesday, players in the market for buying and selling movies looked ahead with cautious optimism that tough times may be near an end.
The forecast for brighter skies in this French Riviera town was underpinned by a strong global box office and feelings that players were back to basics in the independent film business.
But industry experts said there are clouds that could further dampen the outlook after roughly two years. Among those shadowy specters are lower DVD and television revenues, lack of funds for film production and jittery financial markets.
“There’s a feeling better times are ahead, but everyone is cautious — very, very cautious.” said Michael Barker, co-chief of Sony Pictures Classics, the specialty film label of major studio Sony Pictures Entertainment.
His comments were echoed by Jonathan Wolf, executive vice president of the U.S.-based Independent Film & Television Alliance, which runs the American Film Market. He used the term “tempered optimism” to describe the outlook.
The Cannes film festival is known for bringing together top directors like Oliver Stone and actors such as Russell Crowe in a gathering that celebrates what is new and fresh in cinema.
But in trade show booths and hotel rooms here, companies in the Cannes film market buy and sell rights to distribute titles such as “Hard Breakers” or “From Mexico with Love” that, for the most part, play only in art houses, on DVD or television.
Those companies fell on hard times starting in 2008 as easy money from private equity led to buyers overpaying for movies and suppliers creating a glut of titles.
In late 2008 and 2009, distributors exited the business or began paying less — some players say 30-40 percent less — for film rights, and producers began pushing down costs.
Now, the market is in the middle of a classic correction that foretells of better times in 2011, as long as the global economy stays stable which is a major factor, experts said.
“People are starting to realize the money is not what it was,” said Stefan Bruner, chief operating officer of producer Imagenation Abu Dhabi. “One topic we discuss is talent, what talent draws at the box office and what you pay for it.”
Key to Bruner’s summation is box office, a basic element of the movie business. Even as DVD and TV revenues fell, theater ticket sales rose in 2009 — roughly 9 percent in the U.S. to $10.6 billion and 6 percent in the European Union to $8.7 billion, among examples supplied by Cannes market organizers.
At the same time, film productions were about constant in the U.S. at more than 1,100 in 2008 and 2009, while in the European Union, they fell about 5 percent to 677 in 2009 from 716 the previous year.
Producers and distributors say most indie productions being funded now — hence, and those being bought-and-sold at Cannes — are of two types: movies made at the high end of indie film, budgeted around $10-$15 million, with marketable stars, or ultra low-budget movies in the cost area of $500,000 or less.
To be sure, snapshots of the Cannes market is complicated by the global economy, because each region has its own issues. Europe is grappling with a debt crisis, which has hampered lending for film production. The U.S. is little different.
But in oil-rich Russia, for instance, a growing appetite for films is fuelling a speculative market that may be overheating, said Sergei Yershov, head of Film Depot/Volga, which acquires and distributes films in that country.
“The box office numbers are not really supporting” some of the prices being paid for movie rights, he said. And Yershov is not alone in his cautious outlook.
Gary Concoff, who heads the media practice of Los Angeles law firm TroyGould and co-chair of an International Film Finance Forum here, said a similar event in 2008 was nearly canceled due to low attendance. This year the gathering was sold out. And what was one of the key topics? Limiting risk.
Editing by Paul Casciato